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Stock Market Sees Double-Digit Gains in 2021 in Pandemic Rebound

Stock Market
Wall Street saw another banner year despite the incredible difficulties placed on the economy by another year of the pandemic. Credit: Unknown/CC BY-SA 3.0

The stock market is ending 2021 with near-historic highs after the slings and arrows thrown at it from yet another year of the pandemic.

After a slight dip, the market is set to close at near-record high levels after an impressive year despite the great uncertainty caused by lockdowns and supply shortages all over the world.

Oil prices were another enormous factor in the economy in the last quarter of 2021, with supply chain shortages exacerbated by political intrigue, but they retreated from a high of $80 a barrel following their largest annual rise since 2009.

Stock markets robust despite nearly-continual pandemic-related challenges

Stock markets dipped just a bit on Friday in sparse trading activity but cemented double-digit gains for 2021, while the U.S. dollar, which enjoyed its best year since 2015, appreciating in value by 6.7%, held steady against most major currencies around the globe.

Several bourses in Europe and Asia were not open on Friday, offering experts an early look into how the year would close out after the markets stopped their trading on Friday in the US.

Britain’s FTSE 100, fell 0.4% while the MSCI World Index stood at just 0.5% off record levels; it has surged an incredible 17% in 2021, its third consecutive year of double-digit gains, Reuters reports.

While many countries across the globe reporting record levels of coronavirus cases and many cities are scaling back their public New Year’s festivities, stocks continued to recover over the holiday as investors were reassured that economies could indeed handle the spikes in the viruses; they are now heading back toward record highs.

Charalambos Pissouros, the head of research at Cyprus-based brokerage JFD Group, explains “As far as COVID is concerned, for now, market participants may stay willing to add to their risk exposures, and perhaps push equity indices to new highs, as several nations around the globe held off from imposing fresh lockdowns, despite record infections around the globe the last few days.”

Corporate profitability despite the tremendous ups and downs of the economy in the past almost two years of the pandemic has led investors to be assured about a global recovery into 2022, feeling sanguine about the prospect of further gains.

The “everything rally” that the stock market experienced in 2021, with wads of cheap central bank cash, coupled with generous government stimulus funds and a strong economic rebound, has made it hard not to profit from extremely high asset prices.

Experts note that it is U.S. stocks, among all others, that have powered the worldwide rally after record-breaking earnings from Big Tech companies made investors happy. The S&P 500 also hit another record high just this past holiday week.

Prices for commodities have had a solid year, with demands sky-high as economies around the world ramped up after reopening. Brent crude futures dropped 0.8% to $78.87 a barrel and U.S. crude oil weakened 0.94% $76.27 a barrel on Friday, per a Reuters report.

But both Brent and WTI are up more than 50% in this past year, egged on by the worldwide economic recovery and the conservative tendency of producers to not flood the markets. While factory activity in China accelerated somewhat in December, analysts believe they may experience more economic headwinds in the future.

Chinese shares closed higher on Friday, ending on a high; however, the blue-chip CSI300 index has lost 5.2% this year, its worst yearly performance in three years.

Turkish Lira falls for fifth straight day

The Turkish lira, which has had an extremely tumultuous year due to the failed economic policies of its leader. Recep Tayyip Erdogan, fell for a fifth straight day, exiting 2021 as the biggest loser in the international currency market.

After falling precipitously, the lira had made some gains, but investors are clearly concerned about Turkey’s unorthodox monetary policy and spiking inflation. Erdogan’s plan to defend lira deposits that was unveiled earlier this month has earned wide skepticism.

The euro ended the year above $1.13 after dropping 7.4% this year after investors bet  that the European Central Bank would be slower to end pandemic stimuli than did other central banks.

The Japanese yen, which incredibly lost more than 11% to the US dollar this year, nudged downward yet again on Friday, to 115.1 yen per dollar; this is close to the four-year lows that were marked earlier in December.

Sterling was largely at its previous levels against the dollar and the euro.

Interestingly, the British pound had its best year since 2014 against the euro, while it experienced a bit of a decrease against the dollar. At one point on Friday it rose to 83.69 pence, its strongest showing since February of 2020, just before the worst of the pandemic.

Government bond markets were generally closed on Friday. Meanwhile prices for cryptocurrency rose, making good on some of their losses earlier this past week. Bitcoin increased by 2% to $48,091, and Ether rose by a similar amount, ending at $3,778.00

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